2
views
0
recommends
+1 Recommend
1 collections
    0
    shares
      • Record: found
      • Abstract: found
      • Article: not found

      How do equity markets react to COVID-19? Evidence from emerging and developed countries

      Read this article at

      ScienceOpenPublisherPMC
      Bookmark
          There is no author summary for this article yet. Authors can add summaries to their articles on ScienceOpen to make them more accessible to a non-specialist audience.

          Highlights

          • Stock markets react negatively to cases and deaths from COVID-19.

          • Impacts of COVID-19 on emerging markets are different from developed markets.

          • Impacts of COVID-19 during rising infection are different from stabilizing infection.

          Abstract

          Based on the supply of stock market returns hypothesis, we argue that the unprecedented adverse shock of COVID-19 on the countries’ economic growth translates into a negative shock to the stock markets. According to the institutional theory, we also argue that the impact of COVID-19 in emerging countries is different from developed countries. Based on the overreaction hypothesis, we expect that the market reaction during the stabilizing period of COVID-19 spread is different from the market reaction during the infection period. Using high-frequency daily data across 53 emerging and 23 developed countries from January 14 to August 20, 2020, we find that COVID-19 cases and deaths adversely affect stock returns and increase volatility and trading volume. Cases and deaths affected stock returns and volatility in the emerging markets, while only cases of COVID-19 affected stock returns, volatility, and trading volume in the developed markets. COVID-19 cases and deaths are related to returns, volatility, and trading volume for emerging countries during the rising infection of COVID-19 (pre-April 2020), while cases and mortality rates are related to returns, volatility, and trading volume in developed countries during the stabilizing spread (post-April 2020). Therefore, the emerging markets’ investors seem to react to COVID-19 cases and mortality rates differently from those in the developed markets across two different periods of COVID-19 infection.

          Related collections

          Most cited references 87

          • Record: found
          • Abstract: not found
          • Article: not found

          Does the Stock Market Overreact?

            Bookmark
            • Record: found
            • Abstract: found
            • Article: not found

            The effect of large-scale anti-contagion policies on the COVID-19 pandemic

            Governments around the world are responding to the coronavirus disease 2019 (COVID-19) pandemic1, caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), with unprecedented policies designed to slow the growth rate of infections. Many policies, such as closing schools and restricting populations to their homes, impose large and visible costs on society; however, their benefits cannot be directly observed and are currently understood only through process-based simulations2-4. Here we compile data on 1,700 local, regional and national non-pharmaceutical interventions that were deployed in the ongoing pandemic across localities in China, South Korea, Italy, Iran, France and the United States. We then apply reduced-form econometric methods, commonly used to measure the effect of policies on economic growth5,6, to empirically evaluate the effect that these anti-contagion policies have had on the growth rate of infections. In the absence of policy actions, we estimate that early infections of COVID-19 exhibit exponential growth rates of approximately 38% per day. We find that anti-contagion policies have significantly and substantially slowed this growth. Some policies have different effects on different populations, but we obtain consistent evidence that the policy packages that were deployed to reduce the rate of transmission achieved large, beneficial and measurable health outcomes. We estimate that across these 6 countries, interventions prevented or delayed on the order of 61 million confirmed cases, corresponding to averting approximately 495 million total infections. These findings may help to inform decisions regarding whether or when these policies should be deployed, intensified or lifted, and they can support policy-making in the more than 180 other countries in which COVID-19 has been reported7.
              Bookmark
              • Record: found
              • Abstract: found
              • Article: not found

              Financial markets under the global pandemic of COVID-19

              Highlights • The COVID-19 pandemic has significant impacts on global financial markets. • Substantial increases of volatility are found in global markets due to the outbreak. • Global stock markets linkages display clear different patterns before and after the pandemic announcement. • Policy responses may create further uncertainties in the global financial markets.
                Bookmark

                Author and article information

                Journal
                J Econ Bus
                J Econ Bus
                Journal of Economics and Business
                Elsevier Inc.
                0148-6195
                0148-6195
                3 December 2020
                3 December 2020
                Affiliations
                [a ]Pepperdine Graziadio Business School, Pepperdine University, 24255 Pacific Coast Highway, Malibu, CA, 90263, USA
                [b ]Department of Electrical and Information Engineering, University of Cassino and Southern Lazio, Via G. Di Biasio 43, Cassino, FR, 03043, Italy
                [c ]Harvard University & University of Messina, Italy
                Author notes
                [* ]Corresponding author.
                Article
                S0148-6195(20)30410-0 105966
                10.1016/j.jeconbus.2020.105966
                7834385
                33518845
                © 2020 Elsevier Inc. All rights reserved.

                Since January 2020 Elsevier has created a COVID-19 resource centre with free information in English and Mandarin on the novel coronavirus COVID-19. The COVID-19 resource centre is hosted on Elsevier Connect, the company's public news and information website. Elsevier hereby grants permission to make all its COVID-19-related research that is available on the COVID-19 resource centre - including this research content - immediately available in PubMed Central and other publicly funded repositories, such as the WHO COVID database with rights for unrestricted research re-use and analyses in any form or by any means with acknowledgement of the original source. These permissions are granted for free by Elsevier for as long as the COVID-19 resource centre remains active.

                Categories
                Article

                Comments

                Comment on this article